Understanding The Language Around Strata Properties
This article is about what it means to own a single lot of property which is part of a larger, shared common property.
If you own an apartment, you share that apartment building’s hallways, elevators, foyers, gardens and car park areas with the owners of the other apartments. That is a legal fact.
There are many words and terms attached to this subject that you may not know. This article will break them down for you.
Strata schemes, plans and titles – what does it all mean?
What is a strata scheme?
A “strata scheme” is a scheme with the goal of placing responsibilities onto all lot owners of a shared common property such as an apartment building.
The purpose of a strata scheme is to unite all lot owners and place onto them the shared responsibility of maintaining, managing and governing the property that they share.
What is a strata plan?
A “strata plan” is legal paperwork that brings a strata scheme’s goal to fruition, establishing a common property area as being shared by joined private lot owners.
What is a strata title?
A “strata title” is simply the legal proof that you own the lot and are part of a strata plan.
What is an owner’s corporation?
“Owner’s corporation” is simply the name of the group of private lot owners that is united in a strata plan over a shared common property area.
What is a body corporate?
“Body corporate”, means the same thing as “owner’s corporation.” If you are reading this article because it is helping you with your job and you are wondering which one of these two terms you should use, you should use “owner’s corporation” because it has replaced the old term, “body corporate”.
What are the powers and responsibilities of an owner’s corporation?
Within the bounds of strata laws, an owner’s corporation can make its own rules for the property it resides over. These rules may even extend beyond the common areas and govern some aspects of the private lots.
An owner’s corporation can decide, for instance, if there are rules in relation to acceptable private balcony use, noise, pets or proper elevator use.
If you have ever noticed the inside of an elevator wrapped in safety padding in the event of a move, the padding was likely chosen by that building’s owner’s corporation.
Now, there are legal responsibilities that a body corporate must abide by. These include:
- Being responsible for the maintenance of all common areas
- Having strata insurance in place which can replace the entire property, if necessary
- Conducting owner’s corporation member meetings, electing a chair person, documenting minutes, corresponding with contractors and keeping records of all these events
- Overseeing, organising and managing the financial aspects of all of the above
How does an owner’s corporation acquire money?
All members of an owner’s corporation pay quarterly levies which are outlined in the strata plan that which unites them.
These quarterly levies cover the cost of:
- Maintenance and repair of common areas
- Bills relating to common areas
- Administrative activities
- Emergency funds
What kind of roles are there in an owner’s corporation?
The Victorian Consumer Affairs site describes an owner’s corporation of being made up of four levels.
Level 1: The Owner’s Corporation, made up of every single lot owner
Level 2: A committee that is made up of elected lot owners (or their proxies) that votes and governs the strata property
Level 3: A delegate of the owner’s corporation. The owner’s corporation chooses its delegate – it can be any lot owner but is usually the chair person, secretary or another corporate role
Level 4: A delegate of the owner corporation’s committee.
Every owner’s corporation must elect a chairperson.
It is the chairperson’s responsibility to run committee meetings and to guide the committee towards making decisions.
This chairperson usually serves as the delegate for owner’s corporation.
A hired Strata manager takes care of common areas in the day-to-day operation of the common property.
Single lot owners are generally not required to do more than pay levies and obey whatever laws have been decreed by their owner’s corporation.
If you are part of an owner’s corporation, you will be invited to annual meetings to discuss the management and operation of the common property.
Attending those meetings will not be compulsory, but it is likely in your interest to stay informed about everything that is going on with your common property and owner’s corporation.
The pros and cons of owning a strata property?
The benefits of owning a strata property may include the following:
- Access to pre-established security guards, security cameras and electronic locks that are part of a building’s overall security system.
- The right to access common areas such as beautiful gardens, libraries, gyms and swimming pools which you don’t need to personally clean or maintain.
- Communal, pre-established solutions to smoke alarm maintenance, utilities and other necessities.
- A community within the owner’s corporation that is full of people you can rely on to act in the best interest of your home.
- The opportunity to become an active part of your owner’s corporation community, to make new allies and learn new skills
- Strata property owners generally pay lower council rates than independent property owners as utilities may be billed minimally per lot.
What are the potential downsides of owning a strata property?
- The cost of paying quarterly strata levies
- The body corporation’s rules regarding the use of lots may be restrictive in ways that are incompatible with your lifestyle; you might not be allowed to live with pets or host parties
- You are unlikely to be able to change some aspects of your property, such as your front door that leads out to your floor’s common hall or the paint of your balcony
- Owner’s corporations, like all businesses, do not operate perfectly. The politics, challenges and failures of one’s owner’s corporation may prove to be too frustrating to live with
Who can help me understand my obligations to am owner’s corporation?
Tick Box Conveyancing is able to help you understand your obligations to any owner’s corporation that operates in any strata lot that may consider buying.
In our pre-purchase report, we fill you in on all of the must-see information in a clear, comprehensive manner.
Leave us your details for a free, 10-minute chit chat.